ECO4223 Exam 2 Latest Update 2025-2026 Exam
50 Questions with 100% Verified Correct
Answers Guaranteed A+
All things equal, if the Federal reserve increases the money supply, the supply curve for
money shifts __________ and causes an ___________ in interest rates.
a. right, increase
b. left, increase
c. right, decrease
d. left, decrease - CORRECT ANSWER: right, decrease
An open market operation is
a. equivalent to printing money
b. a purchase of real government assets by the Fed
c. a purchase or sale of bonds by the central bank
d. buying or selling dollars in the foreign exchange market - CORRECT ANSWER: a
purchase or sale of bonds by the central bank
Change in Monetary Base - CORRECT ANSWER: MB * m
Congress established the federal reserve system primarily to _________.
a. serve as a lender of last resort
b. eliminate political influence on monetary policy
c. establish a common currency throughout the country
d. create a strong central bank - CORRECT ANSWER: serve as a lender of last resort
Currency Ratio - CORRECT ANSWER: c = Currency/Deposits
, Demand for Bonds and Changes in Demand - CORRECT ANSWER: Lenders and
Savers
Changes:
1. Wealth
2. Expected return vs other assets
3. Riskiness
4. Liquidity
Discount Interest Rate - CORRECT ANSWER: Rate charged by the Fed when they loan
money to banks, higher interest rate for unhealthy banks.
During a recession, the supply of bonds______, and the supply curve shifts to
the___________, everything else held constant.
a. increases; right
b. decreases; left
c. increases; left
d. decreases; right - CORRECT ANSWER: decreases; left
During business cycle expansions when income and wealth are rising, the demand for
bonds __________ and the demand curve shifts to the ____________, everything else
held constant.
a. falls; left
b. rises, right
c. falls, right
d. rises, left - CORRECT ANSWER: rises, right
50 Questions with 100% Verified Correct
Answers Guaranteed A+
All things equal, if the Federal reserve increases the money supply, the supply curve for
money shifts __________ and causes an ___________ in interest rates.
a. right, increase
b. left, increase
c. right, decrease
d. left, decrease - CORRECT ANSWER: right, decrease
An open market operation is
a. equivalent to printing money
b. a purchase of real government assets by the Fed
c. a purchase or sale of bonds by the central bank
d. buying or selling dollars in the foreign exchange market - CORRECT ANSWER: a
purchase or sale of bonds by the central bank
Change in Monetary Base - CORRECT ANSWER: MB * m
Congress established the federal reserve system primarily to _________.
a. serve as a lender of last resort
b. eliminate political influence on monetary policy
c. establish a common currency throughout the country
d. create a strong central bank - CORRECT ANSWER: serve as a lender of last resort
Currency Ratio - CORRECT ANSWER: c = Currency/Deposits
, Demand for Bonds and Changes in Demand - CORRECT ANSWER: Lenders and
Savers
Changes:
1. Wealth
2. Expected return vs other assets
3. Riskiness
4. Liquidity
Discount Interest Rate - CORRECT ANSWER: Rate charged by the Fed when they loan
money to banks, higher interest rate for unhealthy banks.
During a recession, the supply of bonds______, and the supply curve shifts to
the___________, everything else held constant.
a. increases; right
b. decreases; left
c. increases; left
d. decreases; right - CORRECT ANSWER: decreases; left
During business cycle expansions when income and wealth are rising, the demand for
bonds __________ and the demand curve shifts to the ____________, everything else
held constant.
a. falls; left
b. rises, right
c. falls, right
d. rises, left - CORRECT ANSWER: rises, right
